Economic, Workplace and Environmental Regulation

There is a scene in the movie Private Parts – the life and career of Howard Stern – where NBC officials, committed to dumping the shock jock, check out the latest ratings and learn, to their dismay, that the DJ’s popularity has rocketed. Pouring through the data, they find that the “number one reason” people tune into Stern is because they are waiting to hear what he will say next.

For all the time that Donald Trump spent on the Stern show, this may be the one lesson he learned. From North Korea’s “rocket man” to “crooked Hillary,” and a dash of Ryan and McConnell bashing, people tune in to this President to hear what he will say or tweet next. For their part, the members of the news media seem to fixate on Trumpian commotion.

Many financial institutions use forced arbitration clauses in their contracts to block consumers with disputes from banding together in court, instead requiring consumers to argue their cases separately in private arbitration proceedings. Embattled banking giant, Wells Fargo, made headlines by embracing the practice to avoid offering class-wide relief for its practices related to the fraudulent account scandal and another scandal involving alleged unfair overdraft practices.

New data helps illuminate why these banks—and Wells Fargo in particular—prefer forced arbitration to class action lawsuits. We already knew that consumers obtain relief regarding their claims in just 9 percent of disputes, while arbitrators grant companies relief in 93 percent of their claims. But not only do companies win the overwhelming majority of claims when consumers are forced into arbitration—they win big.

Today, EPI released a new paper by Cornell professor Alexander J.S. Colvin, which shows that more than half of all private sector non-union workers are currently subject to mandatory arbitration agreements—denying them access to the court system to resolve workplace disputes. Colvin also found that 41 percent of employees subject to mandatory arbitration also have waived their right to pursue work-related claims on a collective or class basis. Next week, the Supreme Court will consider whether arbitration agreements that include class and collective action waivers of all work-related claims are prohibited by the National Labor Relations Act (NLRA). The Court is scheduled to hear argument in National Labor Relations Board v. Murphy Oil USA (along with two other cases Ernst & Young LLP v. Morris and Epic Systems v. Lewis) on October 2.

The NLRA guarantees workers the right to stand together for “mutual aid and protection” when seeking to improve their wages and working conditions. Employer interference with this right is prohibited. However, as Colvin’s report shows, employers are increasingly requiring workers to sign arbitration agreements that force them to waive their rights to collective actions and instead handle all workplace disputes as individuals. In practice, that means that even if many workers faced the same type of dispute at work, each individual employee must hire their own lawyer, and must resolve their disputes out of court, behind closed doors, with only their employer and a private arbitrator.

It is no surprise to observers of labor relations that the Supreme Court is once again considering a petition for certiorari in a case challenging the only reliable source of union funds. Well-funded interest groups have long sought to limit unions’ power by restricting their ability to charge for services they are required by law to provide. The petition currently pending in Janus v. AFSCME rehashes the same arguments rejected by the Supreme Court forty years ago in Abood v. Detroit Board of Education and downplays subsequent legal developments that support reaffirmation of the decision in Abood.

by Eric Goldman, Professor of Law, Santa Clara University School of Law

In 1996, Congress became concerned that excessive liability would threaten the free flow of information over the Internet. To protect the Internet from this risk, Congress passed 47 USC § 230 (Section 230), which eliminates (with limited exceptions) the liability of online services for publishing third party content.

By any measure, Section 230 has been a remarkable success. Think about the Internet services you use daily, such as Google, Facebook, YouTube, Wikipedia, Twitter, eBay, Snapchat, LinkedIn, and Yelp. All of them publish third party content, and all of them have flourished because of Section 230’s immunity. Section 230 also promotes competitive markets by reducing entry costs. New entrants can challenge the marketplace leaders without having to match the incumbents’ editorial investments or incurring fatal liability risks.